SHYAMILI BERA,PURBA MEDINIPUR vs. JCIT, RANGE- HALDIA, PURBA MEDINIPUR

The issue involved in this appeal of assessee is against the action of Ld. CIT(A) in confirming the penalty imposed by the JCIT u/s. 271D of the Income-tax Act, 1961 (hereinafter referred to as the “Act”).

Briefly stated facts as observed by the AO are that the assessee filed return of income originally on 27-10-2005 declaring total income for Rs. 1,47,580/-. Later on the case was re- opened u/s. 148 of the Act and the assessee filed return of income on 10-09-2010 showing a total income of Rs. 2,57,580/-. Thereafter, the AO made assessment u/s. 143(3)/147 of the Act on 30-12-2011 on total income of Rs. 3,05,590/-. According to AO, on perusal of balance sheet noted that the assessee had recorded purchase of a land for Rs.10,96,410/- and for that she has taken unsecured loan from different persons in cash amounting

We have heard rival submissions and gone through the facts and circumstances of the case. We note that the assessee has come before us against the imposition of penalty u/s. Shyamali Bera, AY 2005-06 271D of the Act by the Jt. CIT. According to assessee, she got an opportunity in the fag end of this assessment year i.e. on 30.03.2005 to purchase a plot of land which provided her a passage to the ‘High Road’ and the time given by the seller to the assessee was very short to complete the sale transaction. And the seller of the land insisted on payment of part of the consideration in cash and also insisted the assessee to finalize the transaction on or before 30.03.2005 so that he can avoid the Bengali month of ‘Chaitra’ which is not considered auspicious by Hindus for the purpose of entering into transaction involving immovable property. Because of the short notice the assessee got to conclude the transaction as aforesaid, the assessee could not on her own cough up the total consideration for the land (which included the registration fees and stamp duty) to the tune of Rs.10,96,410/-, which in-turn paved the way for her to resort to taking unsecured loan aggregating to Rs.5,60,000/- in cash from nine persons which aggregated to Rs.4,30,000/- (which were in excess of Rs. 20,000/- each). We note that the AO while framing the reassessment order has taken note that the assessee had purchased a plot of land for Rs.10,96,410/- (including stamp duty registration charges etc.) and had arranged for finance to tide over the emergent requirement by accepting unsecured loan of more than 50% of the cost of investment in land. The AO acknowledges in the reassessment order that the assessee had furnished details of persons from whom unsecured loan exceeding Rs. 20,000/- have been taken by the assessee and he has made a factual finding that notices u/s. 133(6) of the Act were issued to the nine parties from whom Rs.4,30,000/- was received by the assessee and they all had confirmed to the AO that all payments were made to assessee which exceeded Rs.20,000/- in cash. We note that in the reassessment order framed by AO dated 30.12.2011 for the assessment year under consideration i.e. 2005-06 the AO has not made any finding of fact that the assessee had indulged in dubious/bogus transactions to convert her own unaccounted money in the form of unsecured loan. The AO has accepted the purchase of property shown by the assessee in her Balance Sheet as genuine transaction after taking note of the confirmation from the parties who had lent unsecured loan to the assessee. In the light of the aforesaid facts, we are of the opinion that the penalty levied u/s. 271D of the Act by the Jt. CIT was not warranted taking into consideration the facts enumerated above which shows that the assessee had reasonable cause for taking the loan in cash exceeding Rs. 20,000/-. For that, we rely on the order of the Hon’ble Gujarat High Court in the case of CIT Vs. Bombay Shyamali Bera, AY 2005-06 Conductors & Electricals Ltd. reported in (2008) 3 DTR (Guj) 200 and the decision of Hon’ble Madras High Court in the case of CIT Vs. Balaji Traders reported in (2008) 303 ITR 312 (Mad). In the case of Bombay Conductors & Electricals Ltd., supra the Hon’ble Gujarat High Court vide para 6 to 9 has held as under: “6. The object of introduction of s. 269SS of the Act has been stated by the Apex court in the aforesaid case of Asstt. Director of Inspector v. Kum A.B. Shanthi (supra) in the following terms: “The object of introducing s. 269SS is to ensure that a taxpayer is not allowed to give false explanation for his unaccounted money, or if he has given some false entries in his accounts, he shall not escape by giving false explanation for the same. During search and seizures, unaccounted money is unearthed and the taxpayer would usually give the explanation that he had borrowed or received deposits from his relatives or friends and it is easy for the so-called lender also to manipulate his records later to suit the plea of the taxpayer. The main object of s.269SS was to curb this menace. At the same time, while introducing s. 269SS, s. 273B was also incorporated in the statute which provides that no penalty shall be impossible on a person or an assessee, as the case may be, for any failure referred to in the said provision if the assessee proves that there was reasonable cause for such failure. In other words penalty is not automatic under s. 271 D of the Act on mere violation of provisions of s. 269SS of the Act.

In light of the findings of the facts recorded by the Tribunal after appreciating evidence on record and applying the ratio of the apex Court decisions it is not possible to find any legal infirmity in the impugned order of the Tribunal. Not only there is a reasonable cause, as found by the Tribunal, but in light of the finding of the Tribunal that the breach, if any, is merely a technical or venial breach no penalty is leviable as laid down by the apex Court merely because it is lawful to do so without exercising discretion before imposing the penalty.

In the result, the question referred is answered in the affirmative i.e. in favour the assessee and against the Revenue.”

The Hon’ble Madras High Court in the case of Balaji Traders (supra) vide para 7 and 8 of its order has held as under: “7. In the instant case, the CIT(A) and the Tribunal found that (i) there was business exigency forcing the assessee to take cash loans for the purpose of honouring the commitment, viz. issuance of cheque on a particular date; (ii) the creditors were genuine persons and the transactions were never doubted by the authorities below; and (iii) there was no revenue loss

In the light of the ratio laid down by the Hon’ble Gujarat High Court and Hon’ble Madras High Court, cited supra, we are of the considered opinion that there was an exigent event for the assessee to take cash loan for the purpose of purchasing the plot of land which could be used as passage to the ‘Highway’ and since the seller insisted the assessee to complete the transaction before 30.03.2005 and the assessee in order to honor the commitment had to take unsecured loan from nine persons whose names and details were furnished to the AO during assessment proceedings which facts have been found to be correct and the purchase of property has been found to be a genuine transaction. Thus the short notice the assessee got from seller of land to conclude the transaction and the seller of the land insisting the assessee to finalize the transaction on or before 30.03.2005 so that he (seller) can avoid the Bengali month of ‘Chaitra’, led the assessee to accept the loans to conclude the purchase of land. Taking into consideration the facts enumerated above shows that the assessee had reasonable cause for taking the loan in cash exceeding Rs. 20,000/- therefore, we are of the opinion that the penalty imposed was not warranted and, therefore, we delete the penalty imposed by the Jt. CIT and confirmed by the Ld. CIT(A). The appeal of assessee is allowed.

In the result, appeal of assessee is allowed.